Small businesses in ‘maintenance mode’

Small businesses are in “maintenance mode” pending the outcome of the November election, according to the chief economist for the National Federation of Independent Business.

NFIB’s monthly index of small business indicators fell one-tenth of a point in September to 92.8, another recession-level reading. A score of 100 in the index equals conditions in 1986. NFIB’s index has registered below 95 since October 2007.

Only a net 4 percent of small business owners surveyed in September plan to add employees in the coming months, a drop of six percentage points from the previous month.

NFIB chief economist Bill Dunkelberg said small businesses are “spending only where necessary and not hiring, expanding or ordering more inventories until the future becomes more certain.”

Small business owners cited political uncertainty, as well as the economy, as reasons not to expand.

“The election is just weeks away and essentially a horse race, and its outcomes would have vastly divergent policy implications,” Dunkelberg said. “Everyone is waiting to see what happens, especially small business owners who have a lot at stake in the outcome — which could mean higher marginal tax rates and more deficits, or lower marginal tax rates and less government.”

Three problems were tied for first when NFIB members were asked to name the biggest issue facing small businesses: taxes, government regulations and red tape, and poor sales.

A separate survey of the nation’s smallest businesses — those with fewer than 10 employees — found a slightly more optimistic view of the economy and a different set of priorities.

Nearly half of these businesses say they are doing well, according to a poll conducted by Greenberg Quinlan Rosner Research for the Association for Enterprise Opportunity, the National Association for the Self-Employed and Small Business Majority. Another 40 percent say they are doing “just OK,” and 10 percent say they are not doing well.

Two-thirds of these business owners expect to do well over the next two years.

U.S. Chamber: Many small firms say business climate worse than two years ago

Forget four years ago: Is your business better off now than it was two years ago, after the financial crisis had ended?

Sixty percent of small business owners/executives say the climate for their companies has gotten worse over the past two years, according to a quarterly survey conducted by the U.S. Chamber of Commerce. That’s up from 55 percent who said that back in July.

Nearly half of small business owners aren’t sure if their businesses’ best days are ahead of them. Only 15 percent believe the economy will improve over the next two years, and only 17 percent expect to hire more workers next year.

This growing pessimism may be due to the fact that the fiscal cliff is drawing closer without any signs of resolution. Unless Congress acts, tax rates will go up in January for everyone and steep across-the-board cuts will be made in federal spending. More than 60 percent of small business owners think the fiscal cliff will have a significant impact on their businesses.

This leads to what small business owners want the most from Washington: certainty, not more government assistance. This group of small business owners, for example, views health care reform as a problem, not a solution. More than 75 percent say health care reform makes it harder to hire additional employees.

The chamber’s survey of 1,391 small business owners and executives was conducted online Sept. 20-27 by Harris Interactive. The survey participants run companies that have fewer than 500 employees and annual revenue of less than $25 million.

SBA supports more than $30 billion in loans; second only to record 2011

The Small Business Administration supported $30.2 billion in lending to small businesses in fiscal 2012, which ended Sept. 30.

That’s the second-largest amount of loans in the agency’s history, beaten only by 2011’s $30.5 billion. The 2011 record was achieved thanks to temporary incentives — higher government guarantees and reduced fees — that made SBA loans more attractive to borrowers and lenders.

Another temporary program, the ability to use the SBA’s 504 program to refinance commercial real estate mortgages, helped the SBA set a new lending record of $15 billion through that program in 2012. That total includes conventional loans that are paired with SBA-backed loans in this program, which is used to fund fixed assets such as real estate.

The SBA also backed more than $15 billion in 7(a) loans, its flagship lending program. More than 44,000 small businesses received these loans, which are attractive because of their long terms.

Under the temporary funding bill approved by Congress for this year, the SBA will be able to make up to $16 billion in 7(a) loans this year. Congress increased the federal subsidy the SBA needs to guarantee small business loans from $210 million to $333 million.

Kent Hoover is Washington bureau chief for American City Business Journals, the parent company of The Business Journal. He can be reached at khoover@bizjournals.com.